Nielsen: TV and Online Advertising Will Merge by 2020

TV and online advertising remain separate for now, but the increasing digital viewing, technological innovation, and new measurement capabilities are driving the two divided structures toward integration, according to Nielsen and Simulmedia.

A recent report, “The Data-Driven Future of Video Advertising,” by the two companies reveals that in the past seven years, video advertising has become a significant component of online advertising and is expected to garner more than $5.72 billion ad spend in the U.S. this year. And TV companies are looking to become key players in the future of video advertising.

Meanwhile, TV as an ad platform started absorbing many characteristics of online advertising, particularly its rich data and audience metrics, while online advertising needs resonance and reaction measurements in TV advertising to go beyond reach-based advertising mechanisms, the report says.

However, Nielsen points out that the huge demand for multi-screen video campaigns and the need for new measurement capabilities do not necessarily indicate an immediate and full convergence of TV and online advertising, due to several reasons, including:

TV consumption maintains supremacy. According to Nielsen, 283 million Americans spend an average of more than 146 hours watching TV per month, compared to 150 million watching video on the Internet.

Collecting accurate data about consumption habits of TV is labor-intensive, time-consuming, and expensive, while online video content is much easier to measure.

Trust and human relationships are important in the process of buying and selling TV advertising, as most senior TV media buyers have known each other and been working together for decades. However, this human factor is not a consideration in online advertising transactions, because online advertising can be bought and sold through programmatic ad-buying platforms.

Although some traditionally TV-focused agencies incorporate digital video content in their advertising purchases, online video advertising is usually bought by digital agencies that purchase online display ads, social media programs, and search advertising – they are different from traditional TV buying.

So just how quickly will the two separate structures converge? Nielsen and Simulmedia make a prediction as shown in the infographic below:

Related reading

GroupM predicts that global ad spend will top $547 billion next year, up from $524 billion this year. While television will still capture the biggest share of that 12-figure pie (41%), digital's share will grow from 31% to 33%.